Insurance glossary

INSURANCE GLOSSARY OF TERMS

This glossary explains common Risk Insurance terms in clear, plain English for New Zealand clients. It covers Life, Medical, Income Protection, Trauma, Total & Permanent Disablement (TPD), and Business-related covers.

General Insurance Terms

Policy
The legal contract between you and the insurer that sets out what is covered, what is not, and the rules of your insurance.

Policy Owner
The person or business that owns the policy and pays the premiums. This is not always the same as the insured person.

Life Insured
The person whose life or health the policy is based on. Claims are assessed using this person’s situation.

Sum Insured
The dollar amount the insurer will pay if a valid claim is made.

Premium
The cost of the insurance, usually paid monthly or annually.

Level Premium
A premium designed to stay more stable over time. It usually starts higher but increases more slowly as you age.

Stepped Premium
A premium that starts cheaper but increases each year as you get older.

Underwriting
The process the insurer uses to assess your health, occupation, lifestyle and risks before offering cover.

Exclusions
Specific situations, conditions or activities that are not covered by the policy.

Stand-down Period
A waiting period at the start of a policy during which certain claims cannot be made.

Claim
A request to the insurer for payment when an insured event occurs.

Life Insurance Terms

Life Cover
Pays a lump sum if the life insured dies or is diagnosed with a terminal illness.

Terminal Illness Benefit
Allows an early payment of life cover if the insured is diagnosed with an illness expected to result in death within a set timeframe.

Beneficiary
The person or people who receive the life insurance payout.

Estate
Your legal assets after death. If no beneficiary is named, life cover may be paid to your estate.

Medical (Health) Insurance Terms

Medical Insurance
Helps pay for private medical treatment, reducing wait times and out-of-pocket costs.

Pre-existing Condition
Any condition you had symptoms of, were diagnosed with, or sought treatment for before the policy started.

Non-Pharmac Cover
Cover for modern medicines that are not funded by Pharmac in New Zealand.

Excess
The amount you agree to pay yourself when making a claim, before the insurer contributes.

Specialist Consultation
Appointments with medical specialists, often covered under higher-level plans.

Surgical Benefit
Cover for the costs associated with surgery, including hospital and specialist fees.

Income Protection Insurance Terms

Income Protection
Provides regular payments if you are unable to work due to illness or injury.

Monthly Benefit
The amount paid each month while you are unable to work, usually up to a percentage of your income.

Wait Period
The time you must be off work before payments begin (for example, 4, 8, or 13 weeks).

Benefit Period
How long payments can continue for each claim, such as 2 years, 5 years, or to age 65.

Agreed Value
The benefit amount is agreed at policy start and does not depend on your income at claim time.

Indemnity Value
The benefit is based on your income immediately before you became unable to work.

Partial Disability
Provides a reduced payment if you can return to work in a limited or reduced capacity.

Trauma Insurance Terms

Trauma Cover
Pays a lump sum if you are diagnosed with a specified serious illness or injury, such as cancer or stroke.

Specified Conditions
A defined list of illnesses and injuries covered under the policy.

Severity-Based Cover
Pays different amounts depending on how serious the illness or condition is.

Buy-Back Option
Allows you to reinstate life cover after a trauma claim has reduced or used it.

Total & Permanent Disablement (TPD) Terms

TPD Cover
Pays a lump sum if you become permanently unable to work or care for yourself due to illness or injury.

Own Occupation
You are considered disabled if you cannot return to your specific job.

Any Occupation
You are considered disabled only if you cannot work in any job you are reasonably suited to.

Activities of Daily Living (ADLs)
Basic personal tasks such as bathing, dressing, or feeding yourself.

Business & Key Person Insurance Terms

Business Insurance
Insurance designed to protect a business from financial loss caused by death, illness or disability of key people.

Key Person Cover
Provides funds to help a business survive the loss of a critical employee or owner.

Shareholder Protection
Ensures business owners can buy out a deceased or disabled partner’s share.

Revenue Protection
Covers loss of business income when a key person is unable to work.

Debt Protection
Ensures business loans can be repaid if an owner dies or becomes disabled.

Final Note

This glossary is a general guide. Each policy is different, and wording matters. Don’t hesitate to reach out directly if you have questions about your policy or any terminology associated with it.